I recently made a bad real estate investment in which I lost $101,000. How is this handled for next years taxes?

[alexvsaylor-gmai]

Is a real estate loss used as a deductible?

[tagteam]

Was the real estate held for personal use, investment purposes (such as raw land), or business use (such as rental use)?

Losses on property held strictly for personal use are not deductible.

Losses on property held for investment (e.g., raw land) are capital losses and can be used to offset capital gains and up to $3,000 in other income during the year of the sale with any remaining balance being carried forward to future tax years.

Losses on property held for business use (e.g., rental property) are considered to be losses from the sale of business property (generally reported on Form 4797) and can be used to offset all other types of income (and can even generate a net operating loss).

Which type of property did you sell and what were the circumstances?

[chalro]

This was a real estate investment on a foreclosure that had a superior lien on it therefore I lost my investment.

I think the use of a Sch D is the way to go here.  Thank you.